With increasing incidents of hacking in the world of digital currency, cold storage offers a safe place for the cryptocurrency owners. What Is Cold Storage For Bitsafe bitcoin chart And Why Does It Matter? Our network of expert financial advisors field questions from our community.
Are you a financial advisor? Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. The latest markets news, real time quotes, financials and more. There is increasing use and acceptance of virtual currencies, more advancement in software and systems, and rising numbers of participants.
But, another thing that has been rising with the popularity of virtual money, it’s the number of hacking cases and fraudulent practices. Since the regulatory framework of virtual currencies is not yet well developed, there is no resource for the owners in case of fraud or theft. Technically nowhere, as it’s not Bitcoins that are stored. Thus, it’s the digital wallet holding the public and private keys that needs to be protected by storing at a safe place.
The first way is to encrypt your wallet is by using a strong password. The second way is to make a backup of the wallet. Even a computer malfunction can result in a loss of Bitcoins, let alone hacking. Multisig is another method is to protect Bitcoins.
Cold storage is another way to secure Bitcoins. It involves storing Bitcoins offline–meaning, away from any internet access. Keeping Bitcoins offline substantially reduces the threat from hackers. This reduces the effort of digging out coins from the cold storage every now and then for everyday use.